HG

Sunday, January 2, 2011

52-WEEK FLOP: ONMOBILE GLOBAL SERVICES

As a play on both domestic and other key emerging markets' telecom fortunes, the worst may probably be over for the company.

With several new entrants launching mobile services, there was a tariff ‘war' as each operator tried to woo subscribers. This led to falling average revenues for a user and affected value-added services usage as well.

The entire telecom sector witnessed a significant rating and as a result even a VAS player such as OnMobile's stock price fell by as much as 36 per cent over the past year. Of course 2009-10 was a difficult year for OnMobile with net profits falling steeply over the previous fiscal.

But there seems to have been a revival of sorts in the first half of FY11, with revenues growing 18.3 per cent to Rs 255.3 crore over the same period in the previous year, while net profits zoomed 123.8 per cent to Rs 41.4 crore.

The tariff wars now seems to be abating and with the launch of 3G by some operators and many more of OnMobile's clientele set to do the same over the next few months, the company would hope to drive up volumes.

Globally too with strong wins from Telefonica, where implementation in 13 Latin American countries is set for March 2011, and strong execution for Vodafone in countries such as Egypt, revenue visibility is enhanced significantly.